PECULIAR BANKRUPTCY

New Zealand Times, Volume XLIX, Issue 11163, 20 March 1922, Page 4

PECULIAR BANKRUPTCY

50/- IN THE PBUND FILES AGAINST ADVICE OF SOLICITOR AND BANKER. VALUER-GENERAL CRITICISED, (Special to “Times.”) AUCKLAND, March 17. The alleged action of the ValuerGeneral in counselling a local farmer to file a petition in bankruptcy against the advice of his creditors, banker and solicitor, was criticised at a meeting of creditors in the estate of James Smith, farmer, of Ngaroto, held before the Deputy-Official Assignee, Mr H. W. Sanson. In reading the bankrupt s statement Mr Sanson mentioned that the case was quite unique in that the earn due to unsecured creditors amounted to £l3l, and the amount bankrupt was due to receive from the dairy company this month was in the region of £260. Certainly the farm was subject to heavy mortgages, but the mortgagees had stated definitely that they were quite adverse to Stmith filing, and stated, moreover, that they would have been perfectly willing to confer with him or the matter.

AGAINST ADVICE OF BANKER AND SOLICITOR.

The bankrupt was questioned by the various creditors, and it was found that he had filed entirely against the advice of his solicitor and of" his banker. In further examination the bankrupt asserted that, in view of the. recent notices in the Press, he had interviewed tlie Valuer-General, and that official, after going into figures submitted, ana after having obtained information as to the present valuation of the farm, had advised him to file so as to bring things to a head. Bankrupt’s assertion was corroborated by Sidney Smith, who was alsq present at the interview. The creditors condemned in very strong terms the action alleged to have been taken by the Vainer-General. BANKRUPT’S STATEMENT. Bankrupt, in bis statement; attributed the cause of his failure to. the big drop in butter-fat and stock prices. He purchased the Ngaroto property pf over 600 acres in 1919 at £32 per acre. As a deposit he had conveyed to the vendor at an estimated price of £2200 the property he (bankrupt) owned at Te Rapa. The Ngaroto property was mortgaged at the time for £12,000, which liability bankrupt had taken over. Hie balance of the purchase money had been made through the National Bank of New Zealand. Bankrupt, in order to stock the farm and carry on, borrowed £IB7O, transferring in return a mortgage for that amount, which he held .over a certain property. He had also given a mortgage over all his stock and farm implements. Continuing, bankrupt stated that ,he had been milking 100 cows and that while but-ter-fat and stock were high in price, everything went well. Bankrupt was now paying £llOO a year in interest on mortgages, arid when this was deducted from the receipts received from butter-fat and stock sold, little was left.

STRONGLY-WORDED RESOLUTION The creditors unanimously passed a resolution strongly disapproving of the Valuer-General taking upon himself the responsibility of advising, the bankrupt to file his petition in view of the fact that there was available over 50s in the £ to pay the unsecured creditors; and furthermore that they understood from the pnblio statement of the Prime Minister that the purpose of the Valuer-General’s visit was to assist the fanner by bringing together the parties interested, thus helping distressed agriculturists through the slump. They were satisfied that this year’s results from the farm would show a Surplus of £350 after payment of interest. It was also decided that the DeputyOfficial Assignee be asked to send a copy of the resolution to the department concerned.

The meeting agreed that the only practicable thing to do was for the secured creditors to confer in regard to the future carrying on of the farm. The meeting was then adjourned.